Tax changes on buy to let - what to do?
Discussion
I'm an accidental landlord. Bought a house ten years ago, did it up and lived in it for three years and then escaped off overseas for seven years. The house has been successfully let over that period and is has just over £100k equity in it now.
I got back at the end of 2015 and it seems that the end is nigh. We want to buy a new family home for about £500k and the changes to stamp duty mean that owning my old house will result in an extra £15k in stamp duty on the new place because of the 3% levy. Plus, by the time the tax relief on interest completely phases out in four years it will cost me about £2k per year to subsidise my tenants rent, plus the occasional cost of the property being vacant between tenants every two to three years.
A tenant has just left so it seems to make sense to get rid now, avoid the £15k stamp duty charge on the new place and put the equity into a bigger family house as that now seems a more tax efficient way to play the property market than having 2-3 BTLs as I once envisaged.
Am I missing anything? It is all very frustrating but it seems the BTL party is entirely over. Don't get me started on the reduction in pension allowances!
I got back at the end of 2015 and it seems that the end is nigh. We want to buy a new family home for about £500k and the changes to stamp duty mean that owning my old house will result in an extra £15k in stamp duty on the new place because of the 3% levy. Plus, by the time the tax relief on interest completely phases out in four years it will cost me about £2k per year to subsidise my tenants rent, plus the occasional cost of the property being vacant between tenants every two to three years.
A tenant has just left so it seems to make sense to get rid now, avoid the £15k stamp duty charge on the new place and put the equity into a bigger family house as that now seems a more tax efficient way to play the property market than having 2-3 BTLs as I once envisaged.
Am I missing anything? It is all very frustrating but it seems the BTL party is entirely over. Don't get me started on the reduction in pension allowances!
RanchoGrande said:
Funny though, in the thread in the business section people are saying the tax changes won't effect them and they are planning to buy more properties. Doesn't sound like the btl party is over if you read that thread.
The key is house prices are increasing at vastly more than 3% a year so within a few months of year one you've made the capital gain to net off the additional stamp duty. Added to the fact the press and economists are predicting that in 15 years time most young people 9/10 will not be able to afford to buy. This way they can have it problem free.
In fact if you buy the BTL in a child's name and it's them on the deeds no issue with the 3% for you plus when they come of age 25++ years time they will have it owned outright all for a tiny input by mum and dad now (heck mum and dad could take back that gift in the future as it will be such a small value then).
No uni fees to help with no deposit to help with nada.
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